NJ Recalls

[gunfyter]

Reality,

Lets say I owe $100 K on a second home. I sell the home for $100 K. I just paid off $100 K in debt!

Will my income increase $100 K per year from now on?

I do not know how NJ is paying off debt but it is NOT decreasing the profit except for whatever portion Interest payments are reduced.

 

[gret]

No. This is incorrect. Its now $200 M Positive cash flow... instead of $100M in positive cashflow. Thats a good thing.

But in your example there was a $200M profit before and after liquidating the debt. No change in profit by paying off debt.

You are 100% correct. Sales less cash expenses produces cash flow from operations that is used to pay down debt. Sales less operating expenses, including depreciation, less taxes and interest equals net income (profits).

One should remember that once old debt is paid off, new debt is created to acquire fixed assets such as new aircraft and other equipment used to operate the company. While the clients fund part of the purchase price of new aircraft, the core fleet must be acquired and paid for by the company.

Also, the $200 million in operating profit that has been referred to has decreased, they (Berkshire) aren't saying anymore how much NJ makes, other than it has decreased. If my memory is correct, the reported numbers (I think they referred to it as operating profit) didn't include charges for taxes and interest.

 

[jetlag7]

By the way, ROI is a REALLY BIG DEAL. The investors own the company. They want to make money. If we don't make them enough money in comparison to other companies and investments, the investors will take their money away from us and put it somewhere else.....

Fair enough, but do you happen to know ANYONE who owns shares of NJ stock? I sure don't....

I do however know plenty of folks who own shares in Berkshire Hathaway -- myself included. (side note: B shares are trading below $100/share .. if you ever wanted to own a piece of "the mothership" now is a good time!)

Since some believe shareholder ROI trumps the strength of a brand and quality of the product, let's examine this for a moment....

I don't hold BRK.B shares because of NJ. I hold my B shares because of the stakes in companies like GEICO, BNSF, Mid American, Coke, and AMEX.

NJ accounts for less than .05% of the Berkshire Hathaway portfolio. Profit or loss, they will NEVER "move the needle" in any direction. NJ is a drop in a very large ocean of holdings. Any contribution to the BRK bottom line is fantastic, but the belief the Shareholders will "close the doors" because they don't see 6% ROI is absurd.

I can only speak for myself, but if I ever decide to dump any of my B shares, it won't be because of the machinations of a microscopic subsidiary like NJ.

 

[gret]

You are smart...it is merely a pimple on an elephant's butt when it comes to numbers...once in awhile a PR nightmare, but basically a rounding error to Berkshire.

 

[gunfyter]

I just think its important people are not under the FALSE impression there will be some $500 M a year windfall once NJ pays off the debt.

In cash flow perhaps but not in profit ....

 

[realityman]

Gun,

I'm sorry. I'm not the smartest person financially. I'm still not understanding why it is, when NJA pays off their debt, the amount of 'unencumbered money', ie 'profit', won't increase.

Using your house example, true, if I sell a house I owed $100k on for $100k my income doesn't actually rise. HOWEVER, the monthly payment I had been making on the house is no longer being paid out. So that money now goes into my pool of 'unencumbered money' or 'profit', that I can use for whatever I want. Buying another house, college education, or paying my housekeeper more.

My revenue hasn't changed, no increase in income, but my personal 'profit' has now increased by the amount of the monthly payments I am no longer making on that house.

Why doesn't it work like that at NJA? When they pay off the debt the revenue to the company does not change. I get that. But now there is no longer $500 million being paid out each year to cover the debt. So that $500 million is still coming in to the company (part of the revenue stream), but not going out anymore. So what column would you put that money in? I guess it wouldn't go under the profit column if they chose to just spend it elsewhere, such as part of it going for ADDITIONAL EMPLOYEE COMPENSATION. But if they don't go on a spending spree, and it's still incoming revenue, what do you call it?

Same as the house. I still have my monthly income (revenue), but as I no longer need to make a mortgage payment anymore, I now have more spendable money (profit).

What am I missing?

 

[pilotyip]

Wow, I know for someone like yourself, who has never worked for a respectable company, getting decent pay and work rules is probably something you've never experienced. But for the rest of us professionals, getting a salary and benefits above that of your average high school educated person, is not too much to ask.

And what's your interest in NJA anyways? Dreaming of being able to work at a respectable company?

You're funny, knowing nothing of me; you get to determine that I have never done anything respectable. You know like 26 years service in the Navy, Finishing top of my class from Navy Flight Training, having Squadron Command, OOD (U) on a Nuc Aircraft Carrier, Corporate pilot for a Fortune 500 company. A member of ALPA at the countries largest supplemental carrier, and being offered a job at NJ back in 99, 00, and 01. But I couldn't take the pay cut.

Back in 83 when I had lost my Corporate job to the recession, I was unemployed. CAL hired a guy from my P-3 reserve unit, he told me I should apply they were looking for Check Airman. Being unemployed, I asked my ALPA buddies what they thought. One quote I remember was, "Randy if you cross the line you will be branded as a SCAB and end up your career working for some non-sked at KYIP". Now no one wants to end their career at a non-sked at KYIP. So I did right thing and never returned the call.

However unemployment and age 53 suddenly make a non-sked job at KYIP look much better. I have worked hard to make JUS a better place to work, to give crews proper training. JUS became a major source of pilots for NJ, over the years nearly 30 pilots have left JUS for NJ, in fact 4 came back after being furloughed by NJ in 2008. To see these pilot move on to career positions is truly satisfying.

This career has been a ball and I do not have to dream of anything. I am fulfilling the child hood dream of a 5 year old who saw the P-51 buzz his house in Detroit back in 1948. I love what I do and can not wait to get up and go to work every morning.

So sorry I do not fill your definition of professional, but I am happy with my lot in life, what I have and the accomplishments in my life. Which is more than I can say about many of the posts I see here.

BTW: As posted here many times before there is an element of luck and timing in this career, that in my opinion often out weight the elements of skill and desire. Best of luck in the yet to be determined future of the Fractional Business model

 

[nordo_2]

You're funny, knowing nothing of me; you get to determine that I have never done anything respectable. You know like 26 years service in the Navy, Finishing top of my class from Navy Flight Training, having Squadron Command, OOD (U) on a Nuc Aircraft Carrier, Corporate pilot for a Fortune 500 company. A member of ALPA at the countries largest supplemental carrier, and being offered a job at NJ back in 99, 00, and 01. But I couldn't take the pay cut.

Back in 83 when I had lost my Corporate job to the recession, I was unemployed. CAL hired a guy from my P-3 reserve unit, he told me I should apply they were looking for Check Airman. Being unemployed, I asked my ALPA buddies what they thought. One quote I remember was, "Randy if you cross the line you will be branded as a SCAB and end up your career working for some non-sked at KYIP". Now no one wants to end their career at a non-sked at KYIP. So I did right thing and never returned the call.

However unemployment and age 53 suddenly make a non-sked job at KYIP look much better. I have worked hard to make JUS a better place to work, to give crews proper training. JUS became a major source of pilots for NJ, over the years nearly 30 pilots have left JUS for NJ, in fact 4 came back after being furloughed by NJ in 2008. To see these pilot move on to career positions is truly satisfying.

This career has been a ball and I do not have to dream of anything. I am fulfilling the child hood dream of a 5 year old who saw the P-51 buzz his house in Detroit back in 1948. I love what I do and can not wait to get up and go to work every morning.

So sorry I do not fill your definition of professional, but I am happy with my lot in life, what I have and the accomplishments in my life. Which is more than I can say about many of the posts I see here.

BTW: As posted here many times before there is an element of luck and timing in this career, that in my opinion often out weight the elements of skill and desire. Best of luck in the yet to be determined future of the Fractional Business model

Yip, just tell me when the shortage is gonna start???

 

[gunfyter]

Reality,

Profit does not increase, except by the amount of INTEREST no longer paid ... which if memory served is about $35 Million a year. So if NJ paid all the debt our profit will be $35 million more per year.... Not $500 Millions

With your house ... you don't make more profit, except that you no longer pay interest once its paid off. Your Cash Flow is Better but your profit remains essentially the same.

When you make a house payment, the principal is like putting money into a tax free savings account. No different... except for liquidity.

Consider if you switched to Interest Only loan .... Would you now be making more profit than previously? You are no longer making principal payments ... are we not richer then?

 

[BentOver]

You're funny, knowing nothing of me; you get to determine that I have never done anything respectable. You know like 26 years service in the Navy, Finishing top of my class from Navy Flight Training, having Squadron Command, OOD (U) on a Nuc Aircraft Carrier, Corporate pilot for a Fortune 500 company. A member of ALPA at the countries largest supplemental carrier, and being offered a job at NJ back in 99, 00, and 01. But I couldn't take the pay cut.

Back in 83 when I had lost my Corporate job to the recession, I was unemployed. CAL hired a guy from my P-3 reserve unit, he told me I should apply they were looking for Check Airman. Being unemployed, I asked my ALPA buddies what they thought. One quote I remember was, "Randy if you cross the line you will be branded as a SCAB and end up your career working for some non-sked at KYIP". Now no one wants to end their career at a non-sked at KYIP. So I did right thing and never returned the call.

However unemployment and age 53 suddenly make a non-sked job at KYIP look much better. I have worked hard to make JUS a better place to work, to give crews proper training. JUS became a major source of pilots for NJ, over the years nearly 30 pilots have left JUS for NJ, in fact 4 came back after being furloughed by NJ in 2008. To see these pilot move on to career positions is truly satisfying.

This career has been a ball and I do not have to dream of anything. I am fulfilling the child hood dream of a 5 year old who saw the P-51 buzz his house in Detroit back in 1948. I love what I do and can not wait to get up and go to work every morning.

So sorry I do not fill your definition of professional, but I am happy with my lot in life, what I have and the accomplishments in my life. Which is more than I can say about many of the posts I see here.

BTW: As posted here many times before there is an element of luck and timing in this career, that in my opinion often out weight the elements of skill and desire. Best of luck in the yet to be determined future of the Fractional Business model

It is fairly obvious, from your posts, that you either have very little respect for your worth as an employee, or you are just a bit scared at the idea of pilots attempting to get a tad bit more money every contract. It's called, at the very least, a cost of living increase.... (not even talking about longetivity increases yet).... Your notion that asking for some extra coin is going to put a company out of business is akin to a 22 yr. old regional pilot signing off on a contract because of SJS or furlough threats.

NJA, makes money, (supposedly?).. The money they make is a direct result of the pilots hard work satisfying the customer.. Unlike 121 airlines, where the pilots hardly see the passengers, NJA pilots are truly the life blood of the operation. They deserve to be compensated accordingly, especially the SIC's who have seen their expected career progression grind to a decade long halt.

The importnt part of all this you don't seem to see... If NJA was non-Union, or if JUS needed it, pilots would get paid peanuts and have zero work rules other than FAA minimums... Because we all know that younger pilots would gladly do the job for experience.... Unions in aviation, especially at larger companies, are almost an absolute must in todays cut throat business world. Case in Point...JetBlue's fall from grace over the last few years.

And it's not that I care where you work. I took a job at a two bit turbo prop operator to get by after NJA... But at no time did I ever tell myself that this is as good as it's gonna get. Nor did I ever voluntarily offer to work for less so the company would prosper. It's like Jesse James tattoo says, "Pay Up $ucker" I don't work for free, and when push comes to shove I want a raise every so often to ..

What I do have concerns with is your attitude towards pilots (employees) seeking to better themselves through incremental raises. The owners certainly get paid, the professional employees should as well.

I have no dog in this fight. Resigned from NJA and have moved on to the majors. But I'm still interested to see how NJA pans out.